1. Conventional ETC Systems
A wide variety of payment schemes may be employed by the consumer to purchase goods or services. For example, a consumer may use credit cards, debit cards, personal checks, cash, etc. In accepting any or all of the non-cash forms of payment, it is important that the retail establishment be assured that the credit which it extends to the consumer is within the limits specified by the financing service and that the consumer is current in payments made to the financing service, or that the consumer's checking account and payment history are sufficient to warrant acceptance of a personal check. For these reasons, a variety of services have been established which enable a retailer to perform some type of credit check in a non-cash transaction. Particularly in the case of credit cards, this may include the circulation of pamphlets or other listings indicating the account numbers of credit cards which are not to be honored for various reasons, including poor credit risk and theft. However, such listings are generally cumbersome in use, and exhibit an inherent time lag between distribution of the pamphlets and their actual use which can result in the erroneous acceptance of a charge. Additionally, such pamphlets are not readily applicable to the verification of personal checks.
As a result, a variety of automated systems have been developed which enable a retail merchant to communicate with the company issuing the credit card (or its representative), or a company which will guarantee the personal check or otherwise extend credit, to obtain an immediate indication as to whether or not the credit card or check should be accepted or rejected. Such systems may take the form of a clearing house which, in response to a conventional telephone call, provides verification against listings it maintains at the clearing house. More recently, such systems employing voice communications have been replaced with automated dial-up systems. Such systems automatically read magnetic markings on the credit card or check and transmit data over the conventional voice telephone facilities to interrogate a database as to whether or not the credit card or check may be accepted. These systems are generally known as electronic ticket capture (ETC) systems.
A conventional ETC system employs a plurality of remote terminals which communicate over conventional telephone lines with at least one host computer. Such an ETC system is used to electronically process credit sales and the like. Typically, such remote terminals are located at retail establishments and are referred to as point-of-sale (POS) terminals. These POS terminals provide the host computer with information relating to a variety of transactions such as sales, returns, authorizations, deposit inquiries and voiding of a previously entered transaction.
Of particular interest to the present invention, an authorization transaction typically seeks approval from the host computer for the extension of credit as in credit card sales. An authorization may be performed alone or in conjunction with other transactions such as sales. Transactions which require authorization from the host or which communicate with the host while the transaction is performed, are referred to as on-line transactions. For example, transactions in which a consumer is given credit, e.g., those in which an amount is charged to an account, typically need to be authorized by the host; therefore, such transactions are generally performed on-line. Transactions which may be performed at the remote terminal and which do not require interaction with the host when such transactions are performed, are referred to as off-line transactions.
Each on-line transaction typically involves a conventional telephone call to the host for approval at the time the consumer attempts the transaction. Since off-line transactions do not require communication with the host when the user attempts the transaction, the cost of the telephone call associated with that transaction is saved. However, such off-line transactions eventually need to be communicated to the host. Typically, these off-line transactions are transmitted to the host during end-of-day processing. End-of-day processing is a procedure in which the information related to off-line transactions is transmitted to the host and checked for errors, errors are corrected to the extent possible, and databases are updated, etc. Of course, a telephone call is still required for transmitting off-line data, but the cost of such a call is less than the cost of making a call for each off-line transaction. Such telephone calls are conventional in the sense that a communication link is established between the calling station (i.e., remote terminal) and the called station (i.e., host computer) as in a conventional station-to-station phone call when the called station places its phone or modem in an off-hook state in response to the call from the calling station.
While they reduce the need for human intervention in the verification of credit transactions and decrease delays in compiling and accessing a list of unacceptable account numbers, such automated systems are still subject to a number of drawbacks. Such drawbacks include the high cost of transmission, the need to establish conventional telephone calls, high data transmission errors, lengthy and complex end-of-day processing, inadequate error detection and error recovery schemes, and limited capabilities of the POS terminals.